Pakistan is a high risk country because of its unstable security situation. However, due to the country’s vast population, there is significant potential for a sizeable market for consumer-orientated businesses as the purchasing power of individuals improves. Pakistan's close geopolitical ties with China should also ensure that it benefits from China's rise, through growing trade and investment.

We keep our clients informed of the latest market moves and political developments in Pakistan, as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 16 of Pakistan’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert research teams. We aim to keep you one step ahead, so you can operate with confidence in Pakistan.

Country Risk

Pakistan Country Risk

BMI View:

Core Views:

  • Increased political stability is likely to result from the December 16 Peshawar school attacks in the near term, as opposition politicians come together to look for ways to fight the growing terrorist threat. Over the longer term, the government has an opportunity to tackle terrorism from a grassroots level as it looks to implement a 20-part National Action Plan to combat the spread of extremism.

  • The Pakistani government's reform efforts are slowly bearing fruit, with efforts to reduce energy subsidies, broaden the tax base, and offload stakes in public sector enterprises all contributing to a substantially lower fiscal deficit in Fiscal Year 2013/14. We expect further progress in FY2014/15, which should see the fiscal deficit fall further to 5.1% of GDP.

  • Lower oil prices and the ongoing reduction in government borrowing should...

To read the full article Register for Free or Login

Pakistan Operational Risk Coverage (9)

Pakistan Operational Risk

BMI View:

Pakistan is a very high risk country in both regional and global terms, particularly because of the country's extremely unstable security situation. Its overall Operational Risk score is depressed by a number of factors, namely its large uneducated labour force, poor logistics network owing to an overdependence on road freight, endemic corruption, and the ongoing threats to national security posed by the presence of a large number of terrorist networks and long-term tensions with neighbouring India over Kashmir. For these reasons, Pakistan receives a low score of 34.6 out of 100 in our overall Operational Risk index, putting it in 27th position in Asia. That said, the country's far-reaching road network and developed banking system provide good access to international financial markets, significantly reducing risks to investors and incoming businesses.

The main risk to investors in Pakistan is the country's extremely...

To read the full article Register for Free or Login

Pakistan Crime & Security

BMI View:

Crime and security risks to foreign investors are very high in Pakistan, owing to the high incidence of violent crime in the country, the prevalence of terrorist networks, and the ongoing threat of war with India. There is an ongoing risk of terrorist activity in the country, and Pakistan plays host to a number of international terrorist networks, most notably al-Qaeda, which pose a direct threat to foreign workers. The threat is exacerbated by the underfunded and corrupt nature of Pakistan's counter-terrorist and police forces, and, crucially, the perceived role of the Pakistani authorities in supporting various terrorist networks. Finally, there remains in Pakistan an existential threat of war with India. While we do not expect this to jeopardise foreigners in the short term, it remains a concern for businesses operating in the country, particularly around the disputed border territory of Kashmir. For these reasons, Pakistan scores 8.9 out of 100 for...

To read the full article Register for Free or Login

Pakistan Labour Market

BMI View:

Pakistan is one of the poorest regional performers with regards to Labour Market Risk, with very low basic skills levels and high costs of employment. Very low secondary and tertiary enrolment rates are further significant impediments to the development of a workforce capable of skilled, technical labour, which may result in the need to import skilled labour, incurring high employment costs. Pakistan's overall score for Labour Market Risk is 42.9 out of 100 of the 30 countries in Asia.

Extremely low enrolment and attainment levels at both secondary and tertiary education levels are the main impediment to a highly skilled workforce in Pakistan. The country's low score of 37.9 out of 100 for Education reflects the fact that only 36.7% of its labour force have secondary education and above. Investors seeking skilled, secondary-educated employees can therefore expect wage costs to be higher. Moreover, we anticipate these problems...

To read the full article Register for Free or Login

Pakistan Logistics

BMI View:

Pakistan has a very underdeveloped logistics network, suffering from a lack of government investment in its transport network and utilities sectors. Poor access to key utilities such as water, internet, fuel and electricity remain an ongoing operational risk to businesses. Furthermore transport risks continue to rise as the deterioration of the rail network increases pressure on the country's roads, causing congestion and disruption to supply chains. For these reasons, Pakistan receives a low score of 46.1 out of 100 for overall Logistics Risks in the BMI Logistics Risk Index, putting it in 17th position out of 30 countries in Asia.

Pakistan's negative growth prospects represent a considerable deterrent to investors. Nevertheless, the country's considerable market size and vast regions of untapped resources mean that opportunities for investment will remain. Poor access to key utilities such as water and internet, as...

To read the full article Register for Free or Login

Pakistan Trade & Investment

BMI View:

Trade and investment risks are very high in Pakistan owing to the country's high fiscal and trade barriers and the extent of red tape plaguing its bureaucracy. Compounded by the volatile domestic security situation, foreign investment outflow in recent years has slowed, a trend we expect to continue in the foreseeable future. That said, the country's developed banking system provides good access to international financial markets. For these reasons, the country has an overall score of 29.5 out of 100 for Trade and Investment, putting it in 24th position out of 30 countries in Asia.

Following a sharp rise in foreign direct investment (FDI) in Pakistan from the mid-1990s to the mid-2000s, since 2008 it has slowed significantly, and currently accounts for just 11.8% of Pakistan's total GDP. For the most part, inconsistent economic policies, high fiscal and trade barriers, high corporate tax rates and poor infrastructure are responsible for this...

To read the full article Register for Free or Login

Pakistan Industry Coverage (16)

Agribusiness

Pakistan Agribusiness

BMI View:

BMI View: As the country's wheat harvest begins, reports suggest Pakistan could enjoy a record-breaking crop. Officials have credited new strains of higher yielding wheat as being responsible for at least some of the improvements, but low cotton prices may have had more of an impact. Recovering prices for cotton will test the resilience of wheat output in the coming years of our forecast period, while also constraining cotton consumption growth. Rice farmers have suffered from plummeting prices, particularly for basmati. They are calling for similar export subsidies to those being granted to sugar and wheat consignments. Sugar mills are reported to be facing bankruptcy, which would...

To read the full article Register for Free or Login

Autos

Pakistan Autos

BMI View:

We have raised our 2015 forecast for auto sales in Pakistan to 16.7%, up from 4.8% previously. The significantly stronger outlook is underpinned by easing monetary conditions, which will help to lower credit costs for potential car buyers, while the government's taxi scheme will also continue to spur demand momentum over the coming quarters.

According to the Pakistan Automotive Manufacturers Association (PAMA), for the first nine months of FY2014/15 (July - June), passenger car sales expanded by 21.9% year-on-year (y-o-y), while commercial vehicle (CV) sales grew by 35.0% y-o-y, bringing overall auto sales growth to 23.9% y-o-y. Auto sales over the first three quarters of FY2014/15 amounted to 126,366 units.

Given that our Country Risk team believes there is still room for further easing over the coming months, lower credit costs will continue to fuel strong demand for the sector. For the CV segment, we foresee...

To read the full article Register for Free or Login

Commercial Banking

Pakistan Commercial Banking

BMI View:

...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

To read the full article Register for Free or Login

Consumer Electronics

Pakistan Consumer Electronics

BMI View:

BMI View: Pakistan continues to present major challenges to vendors, and underperform its potential due to a number of economic, social and political risks. However, the large population and rising incomes mean there are still opportunities for vendors. Although political and security concerns remain, the economic environment is supportive of expansion, with rising incomes, consumption growth, and encouragingly, private sector credit growth has also recovered from its recent trough. The opportunity provided by the large population and economic environment has been sufficient to attract investment from multinational consumer electronics market leaders...

To read the full article Register for Free or Login

Defence & Security

Pakistan Defence & Security

BMI View:

BMI View: We expect an escalation in domestic security threats though 2015 in response to the NATO withdrawal from Afghanistan, the ongoing military offensive in the Federally Administered Tribal Area (FATA), and rising tensions with Indian forces along the Jammu Kashmir border. The Pakistan Government has increased military spending, and is investing in indigenous defence companies. They in turn are looking to increase capacity through international partnership, creating opportunities for foreign players. 

The security situation in Pakistan has steadily deteriorated through 2014. Last year witnessed regular terrorist attacks against military and civilian assets, including Karachi International Airport. This illustrates that domestic and international terror cells are well resourced and well trained, making them a credible threat to domestic and international organisations. Moreover, the NATO...

To read the full article Register for Free or Login

Food & Drink

Pakistan Food & Drink

BMI View:

BMI View: Increased co-operation between Islamabad and Beijing, particularly in the area of energy infrastructure, should provide strong support to investment growth in Pakistan over the coming years. Our longer-term domestic demand outlook for Pakistan is looking relatively bright, as declining costs of credit and disinflationary pressure are likely to prove supportive of domestic demand. We have upgraded our real GDP growth forecast for fiscal year 2014/15 (July-June) to 4.2% from 4.0% previously. Per capita food consumption is forecast to experience strong growth, however this will be from a low base and consumption is likely to remain significantly lower than other key emerging markets.

Headline Industry Forecasts (local currency):

  • 2015 per...

To read the full article Register for Free or Login

Freight Transport

Pakistan Freight Transport

BMI View:

The freight mix in Pakistan is set to perform moderately in both the short and medium term, with growth constricted somewhat by the parlous state of many integral economies at present. Also, domestic strife, such as the road blockade in Punjab in August 2014, has had a detrimental effect on freight output and such scenarios could flare up again into 2015.

Export cargo worth USD600mn came to a standstill in August 2014 due to a road blockade in the province of Punjab, according to exporters and shipping line sources and reported by Business Recorder. The tussle between the Pakistani government and opposition political parties - Pakistan Tehreek-e-Insaf and Pakistan Awami Tehrik - has resulted in a virtual collapse to businesses, trade, social and exports activities in the province. This could have a significant detrimental impact on the Pakistan freight industry should further blockades take place going forward.

The...

To read the full article Register for Free or Login

Infrastructure

Pakistan Infrastructure

BMI View:

BMI View:  Our outlook for Pakistan's construction sector remains largely subdued for 2015 and beyond. Domestic political uncertainty is undermining confidence in the market, and ongoing security risks continue to deter foreign investors. High levels of government debt and rising inflation are restricting public spending, and while many infrastructure projects are planned or underway, these continue to suffer from escalating costs and delays.

Pakistan's infrastructure network, starting as it does from a low base, does offer enormous long term potential. The country benefits from a strong regional location, good relations with powerhouse China and a large potential labour pool. If it is able to secure political stability and address corruption at high levels in order to create a more attractive investment environment we may see further growth in Pakistan...

To read the full article Register for Free or Login

Insurance

Pakistan Insurance

BMI View:

BMI View: The insurance market in Pakistan is challenged by a multitude of factors - growing security concerns, widespread poverty and frequently constrained access to capital for companies operating within the market. A recent surge in the economy as a result of lower commodity prices will benefit the wider economy and boost purchasing power as inflationary pressures subside. We also remain optimistic surrounding the micro-insurance sub sector which has created opportunities for lower-income households to access the benefits of insurance at more affordable levels.

We maintain our outlook that the embryonic Takaful sub sector benefiting from new regulations will assist in increasing insurance penetration in the country. Since the passing of new regulations in May 2014 more conventional firms are able to offer Sharia-compliant insurance products to...

To read the full article Register for Free or Login

Medical Devices

Pakistan Medical Devices

BMI View:

BMI Industry View: The Pakistan medical device market is small for a country its size. Domestic production is limited primarily to steel surgical instruments and the majority of the market is supplied by imports. In 2013, BMI estimates that the medical device market was worth USD259.7mn, or USD1.4 per capita. The medical device market is expected to grow at a reasonable rate, with a CAGR of 6.3% forecast for the 2013-2018 period.

Headline Industry Forecasts

...

To read the full article Register for Free or Login

Oil & Gas

Pakistan Oil & Gas

BMI View:

BMI View: While a string of recent exploration successes boosted Pakistan's oil and gas reserves in 2014, we forecast the country's reserves to continue declining over the next decade due to excessive use and lack of new significant discoveries. Nonetheless, recent discoveries and greater private sector involvement in the upstream sector pose an upside risk to our forecast and could stimulate much needed investment thus helping the country temper or reverse the negative trend.

Headline Forecasts (Pakistan 2013-2019)
2013 2014e 2015f ...

To read the full article Register for Free or Login

Pharmaceuticals & Healthcare

Pakistan Pharmaceuticals & Healthcare

BMI View:

BMI View: Medicine sales in Pakistan will continue to grow significantly from a low base. Underpinning this trajectory includes a reform in the country's pricing environment that will see scope for an increase in pharmaceutical prices. This will in turn encourage more investment from drugmakers to capture the commercial opportunities stemming from the country's epidemiological profile. Downside risks remain due to the lack of policy continuity and potential cost containment measures

Headline Expenditure Projections

  • Pharmaceuticals: PKR231.2bn (USD2.29bn) in 2014 to PRK254.0bn (USD2.47bn) 2015; +9.8%in local currency terms and +7.7% in US dollar terms.

  • Healthcare: PKR684.5bn (USD6.78bn) in 2014 to...

To read the full article Register for Free or Login

Power

Pakistan Power

BMI View:

Electricity Generation And Power Generating Capacity

Total Electricity Generation Data And Forecasts (Pakistan 2013-2018)
2013e 2014e 2015f 2016f 2017f 2018f
e/f = BMI estimate/forecast. Source: National Sources, BMI...

To read the full article Register for Free or Login

Real Estate

Pakistan Real Estate

BMI View:

BMI View: Pakistan's commercial real estate sector is underdeveloped, with long-term security problems and unstable politics having served to deter investment into the sector. Although we see this situation continuing, at least in the short term, in the long term there are significant opportunities as prices are low, meaning potential yields are high, and there is considerable room to expand and modernise Pakistan's stock of commercial real estate.

Improved regulations surrounding the creation of real estate investment trusts (REITs) could pave the way for increased investment via this format, and lead to more Pakistani investment being directed into the home market rather than overseas.

We forecast Pakistan's real GDP growth rate will be around 4.1% a year over our forecast period to 2018. The economy is held back by concerns over the security situation and political...

To read the full article Register for Free or Login

Shipping

Pakistan Shipping

BMI View:

Good Port Growth Expected

We continue to forecast moderate-to-strong throughput growth at Pakistan's main ports in the fiscal year ending June 2015, with volumes growing by 3-8%. Growth will be marginally down on the previous year, reflecting a slowdown in foreign trade expansion.

In headline terms, Pakistan's economy currently has two factors working in its favour and one against. Positive momentum is provided first, by lower international oil prices, and second by the process of economic reforms. The negative factor remains the poor security and high political risk environment, which continues to cause concern among investors. Despite a degree of political turmoil the economy has remained firm. Prime Minister Nawaz Sharif's popularity remains strong. This suggests the reform process will continue, supporting accelerating real GDP growth. Indeed, the Pakistan Muslim...

To read the full article Register for Free or Login

Telecommunications

Pakistan Telecommunications

BMI View:

BMI View: Mobile data usage increased appreciably in the 2013/14 financial year and grew at an even faster rate in the period to March 2015. The rapid and widespread deployment of 3G/4G networks over the last 12 months lay the foundations for the emergence of a more content-focused industry, although continued reliance on low-cost prepaid services will continue to weigh on operators' bottom lines. The mobile market remains crowded while the wireline market is dominated by the incumbent, creating an imbalance of power. There are few opportunities for an infrastructure-focused new entrant, although there is a case to be made for the establishment of an advanced national broadband network under the aegis of a forthcoming new telecoms policy.

Key Data

  • There were 12.072mn 3G/4G mobile...

To read the full article Register for Free or Login

Latest Pakistan Articles

  • MOL Group's gas discovery is positive news for Pakistan's long-term energy ...

  • The sudden rise in US and European bond yields in May following a long, ste...

  • A stronger commitment to invest in infrastructure and the roll-out of LTE s...

Latest Pakistan Blogs

  • The election of Narendra Modi as India’s new prime minister signals that Ne...

  • One way of gauging global political stability is by assessing the political...

  • Over the past 24 hours, reports have emerged that Saudi Arabia is ready to ...

Latest Pakistan Podcasts

  • Several Asian countries are set to see their telecoms industries exper...